France in 1998

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For the French generally, 1998 was a vintage year, above all because they won soccer’s World Cup, the most watched sporting event on the planet and one for which they had the extra satisfaction of serving as host. This boost to French spirits was only slightly diminished by the subsequent doping scandals that afflicted the annual Tour de France bicycle race.

The fortunes of the Socialist-led government of Prime Minister Lionel Jospin also rose as unemployment, long the bugbear of the French economy, receded and as economic expansion allowed France to qualify for the European Monetary Union without squeezing public spending too hard. The main right-wing opposition parties fared less well and thereby indirectly weakened the standing of Pres. Jacques Chirac. They lost ground in the March regional elections, and this caused some of them to become more dependent on alliances with the far-right National Front.

In foreign policy France acted dismissively in regard to minor aspects of European Union (EU) law by flouting wild bird protection laws but was decisive and, indeed, aggressive on the major issue of the new European Central Bank (ECB). Chirac took the EU summit meeting in May to the brink of breakdown before he succeeded in forcing the Dutch president of the ECB eventually to step down early in favour of Jean-Claude Trichet, governor of the Bank of France, who would serve a full eight-year term as head of the bank. This row led to a further cooling of relations with Germany. In contrast, France paid more care to its relations and consultations with the U.S., perhaps because the two countries disagreed on many issues.

Political Affairs

The year started unpromisingly for Jospin, whose ruling Socialist Party had its office occupied on January 22 by a wildcat movement of the unemployed demanding an increase in government welfare payments. The protesters also occupied 26 welfare offices throughout the country. The demonstrators received support from Jospin’s coalition allies--the Communists, the small left-wing Citizens Movement (MDC) and the Greens.

Jospin, however, rode out these coalition tensions and refused protesters’ demands that the welfare dole be brought close to the minimum wage level. Later, the threat of street unrest diminished as the unemployment rate fell below 12%. Airing more specific grievances, 150,000 hunters marched through Paris on February 15 to complain about EU restrictions on hunting migratory birds during their nesting period, and in early June, Air France pilots tried to exploit the government’s desire to attract foreign fans to the World Cup by striking to maintain current pilot pay levels after the state-owned airline was partly privatized. Jospin stood firm, and the pilots caved in after 10 days.

The issue of European economic and monetary union continued to cut across party lines. The April 8 parliamentary vote adapting the Bank of France’s statutes to the Maastricht Treaty on European Union divided both sides, as did the National Assembly vote on April 22 by 334 votes to 49 in favour of the euro, the single European currency. The government split, with the Socialists and Greens for and the Communists and MDC against the new currency. The centre-right Union for French Democracy (UDF) federation voted for the euro, whereas their Gaullist partners, the Rally for the Republic (RPR), walked out of the debate despite Chirac’s plea to support the new currency.

The opposition parties had already been shaken by the consequences of the March 15 regional elections. These gave the government coalition 39.6%, the UDF-RPR coalition 35.6%, the National Front (FN) 15.5%, the far left 4.7%, and other minor parties 4.6%. As a result of the vote, the UDF and RPR held less than half the regions in their own right; in order to retain power in four regions--Rhône-Alpes, Picardie, Languedoc-Roussillon, and Bourgogne--UDF leaders resorted to support from the FN.

This caused an uproar within the UDF, which on April 8 expelled Jacques Blanc of Languedoc-Roussillon, Charles Baur of Picardie, and Charles Millon of Rhône-Alpes, whereas Jean-Pierre Soissons of Bourgogne quit of his own accord. Millon, a former defense minister and Chirac ally, announced on April 17 the creation of a new party, the Right. With the apparently increasing power of the FN giving urgency to unity between the two mainstream centre-right formations, the RPR and UDF sought to close ranks by announcing on May 14 a new electoral pact, dubbed the Alliance. Two days later, however, a key UDF component, the Liberal Democracy (formerly the Republican) Party, said it would quit the UDF and merge directly into the Alliance.

The FN was also encountering problems. On April 2 a court condemned its founder-leader, Jean-Marie Le Pen, for his assault on a political opponent during the 1997 election and barred him from holding office for two years. While appealing the ruling, Le Pen decided to name his wife, Jany, to head his party list for the 1999 European Parliament elections. His number two man in the party, Bruno Mégret, whose softer style had helped the FN make inroads into the traditional right, criticized this nomination and on August 28 was publicly lambasted by Le Pen. Their quarrel worsened. On December 23 Mégret and six key supporters were expelled from the FN, and they looked certain to found a new party. In addition, the FN lost its sole parliamentary deputy in a May 3 by-election at Toulon.

The racism issue was, indirectly, kept alive by the trial in Bordeaux of Maurice Papon, who had been an official of France’s World War II Vichy government. On April 2 Papon was sentenced to 10 years in prison for having helped deport Jews to Nazi Germany. Corsican separatists on February 6 assassinated Claude Erignac, the central government prefect on the island, and on May 8 they exploded a bomb at the Provence regional executive offices in Marseilles. On February 18 a Paris court sentenced 36 Islamic militants to terms of up to 10 years in prison for their part in the 1995 bombings in France.

The year was one of the best ever for the French economy. It expanded by 3-3.1% as a result of strong domestic household spending and corporate investment, which more than compensated for the fall in foreign demand for French goods associated with the economic decline in Asia and Russia. This reduced the budget deficit to 2.9% of national output, below the 3% guideline needed for France’s qualification for European monetary union.

Strong growth helped create some 250,000 new jobs and brought down the unemployment rate down to 11.5% in November. Honouring its major election pledge of 1997, the government also cut the standard workweek from 39 to 35 hours, to be applied to companies with more than 20 employees by the year 2000 and to those with smaller workforces by 2002. The aim was to oblige companies to open up new job slots in order to maintain production. Not surprisingly, the measure was opposed by business groups and championed by most labour unions.

With the left wing of his coalition largely placated by the 35-hour week, Jospin resumed the privatization and restructuring that his Gaullist predecessors had started. Some lame-duck enterprises had required substantial state aid to remain in business and to prepare them for sale. France was therefore relieved when on May 20 the European Commission gave final approval to the F 125 billion (about $21.9 billion) of French government aid and guarantees that had been accorded to Crédit Lyonnais and upheld the F 20 billion ($3.5 billion) paid in 1994 to Air France. In return, the EC required the eventual privatization of both these state companies.

After a slow start, privatization moved forward. The government announced plans to sell or reduce its stake in France Telecom, GAN insurance, the CIC bank, and some smaller financial institutions. In the sensitive defense and aerospace sector, the government in June reduced its stake in Thomson-CSF electronics to 43% as a result of the latter’s merger with Alcatel. The Lagardère group was allowed to take a one-third stake in state-owned Aerospatiale.

Foreign Policy

Obscured a bit by the popular euphoria over France’s 3-0 victory over Brazil in the July 12 World Cup final was the serious blow to the French political and financial establishment’s self-esteem dealt a few days earlier by the announcement of the linkup between the Frankfurt and London stock exchanges. This was seen in Paris as an omen that France was being outflanked by a new axis between the pro-European government of Great Britain’s Tony Blair and a Germany grown tired of its special relationship across the Rhine. The concern was reinforced by warnings from Daimler-Benz Aerospace of Germany and British Aerospace that they might leave France behind in their quest to form a single large European aerospace company to rival the new giants in the U.S. The French and German governments also abandoned their plan to develop spy satellites.

By the year’s end France’s leaders had established some rapport with the new German government of Gerhard Schröder, but made more progress in improving relations with Britain and the U.S. During the summer Jospin paid successful visits to both countries. With the U.S., France agreed on April 8 to a new bilateral aviation treaty, which had taken two years of negotiation after the lapse of their previous 1992 airline pact. Generally, the more relaxed tone in Franco-American relations prevented disagreements, such as that over the Middle East, from degenerating into acrimony, as had happened previously.

France remained engaged in Middle East diplomacy. Chirac invited Hafez al-Assad to Paris on July 16, the Syrian president’s first visit to the West in 22 years. Paris talked early in the year of supplementing U.S. diplomacy in the Arab-Israeli dispute, but was happy to take a back seat in the autumn as the U.S. made fresh efforts to break the impasse. On May 18 the U.S. and the EU came to terms over U.S. sanctions on companies doing business with Libya and Iran; the dispute arose out of the move by Total of France to invest in Iranian gas.

During the 1998 UN-Iraq crisis over weapons inspection, France distanced itself from the confrontational tactics of the U.S. and in February tried to play a mediating role. In December, France disagreed with U.S. and British bombing of Baghdad but refrained from overt criticism and ended 1998 seeking a new UN consensus on Iraq.